Transcription of Target redemption forward (TARF) - Credit Suisse
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Target redemption forward (TARF) - Credit Suisse
1/2 Tailor-made solution to enhance your currency rateWhat you should know about the Target redemption forwardA Target redemption forward (TARF) is a structured forward contract that allows you to trade at a better rate than a standard forward contract by integrating leverage and a profit cap holder of a TARF therefore has the opportunity to buy (or sell) a currency against another in a regular sequence of transac-tions at a lower (or higher) level than the respective forward rate on the trade date as long as the maximum profit level set at the beginning has not been reached.
Example for a seller of a currency pair (e.g. exporting companies) Scenario 1 If the profit cap level has not been reached and the currency pair trades below the strike, you will sell the notional amount at the strike rate and the profit cap will be reduced accordingly. Scenario 2 If the profit cap level has not been reached and the currency pair
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